On October 21, 2013, the U.S. Department of Agriculture (USDA) issued a press release announcing the availability of $181 million in funding under the Biorefinery Assistance Program (BAP) to support the development of commercial-scale biorefineries or the retrofitting of existing biorefineries to produce advanced biofuels from non-food sources. The BAP was created under the Food, Conservation and Energy Act of 2008 (the 2008 Farm Bill) and is administered by USDA Rural Development. It provides loan guarantees to viable commercial-scale facilities to develop new and emerging technologies for advanced biofuels. To date, the program has provided approximately $684 million to support biofuels projects in eight states. USDA's press release is available online.

Applications for funding are due to USDA by January 30, 2014. Additional information on how to apply may be found online.

This announcement comes at a time when the 2008 Farm Bill was allowed to expire on September 30, and a House and Senate conference committee recently initiated work to develop a final Farm Bill that may be voted on by Congress and signed into law by President Obama. Upon the end of the government shutdown last week, President Obama publicly stressed the importance of passing a new Farm Bill this year.

On October 21, 2013, the U.S. Department of Agriculture (USDA) issued a press release announcing the availability of $181 million in funding under the Biorefinery Assistance Program (BAP) to support the development of commercial-scale biorefineries or the retrofitting of existing biorefineries to produce advanced biofuels from non-food sources. The BAP was created under the Food, Conservation and Energy Act of 2008 (the 2008 Farm Bill) and is administered by USDA Rural Development. It provides loan guarantees to viable commercial-scale facilities to develop new and emerging technologies for advanced biofuels. To date, the program has provided approximately $684 million to support biofuels projects in eight states. USDA's press release is available online.

Applications for funding are due to USDA by January 30, 2014. Additional information on how to apply may be found online.

This announcement comes at a time when the 2008 Farm Bill was allowed to expire on September 30, and a House and Senate conference committee recently initiated work to develop a final Farm Bill that may be voted on by Congress and signed into law by President Obama. Upon the end of the government shutdown last week, President Obama publicly stressed the importance of passing a new Farm Bill this year.

Biofuels supporters and opponents remain heavily engaged in RFS policy issues. Last week, we reported on a news report that one advanced biofuels trade association, the Advanced Biofuels Association (ABFA), may be working with the American Petroleum Institute (API) on potential legislative language that would provide additional RIN credit for advanced biofuels under the federal RFS program. Since then, ABFA and API have both denied the accuracy of the story. In addition, DuPont announced that it has relinquished its membership in the ABFA and reaffirmed its commitment to advocating that the RFS is working as intended to promote the investment in and development of biofuels and should not be altered in any way through legislation at this point in time.

James C. Greenwood, current President and CEO of the Biotechnology Industry Organization (BIO) and former Member of Congress, sent a letter to the leaders of the House Committee on Energy and Commerce and the Senate Committee on Environment and Public Works asserting that the broad consensus among the biofuels industry, including the advanced biofuels industry, is that now is not the time to legislate on the RFS.

API has continued its opposition to the RFS by announcing that it plans to sue EPA if it fails to issue the final rule setting the 2014 RFS renewable volume obligations (RVO) by November 30, 2013. While the law mandates that EPA issue in final the following year's RVOs by November 30, EPA has consistently missed that deadline. This is the first time API has threatened to sue the Agency if it does not meet the November 30 deadline.

Obligated parties and the organizations that represent them continue efforts to challenge and weaken the federal Renewable Fuel Standard (RFS). Several lawsuits have been filed recently in the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit Court) challenging the final rule issued by the U.S. Environmental Protection Agency (EPA) setting the 2013 RFS requirements. Monroe Energy, a subsidiary of Delta Airlines, the American Fuel and Petrochemical Manufacturers (AFPM), and the American Petroleum Institute (API) have each filed challenges to the EPA's final 2013 RFS rule and its renewable and cellulosic volume requirements.

On October 10, 2013, Monroe Energy filed an emergency motion for expedited consideration of its case challenging EPA's final 2013 RFS rule. The company argues that expedited review is necessary given the June 2014 deadline for compliance with the rule that would require Monroe to spend millions on the purchase of Renewable Identification Numbers (RIN).

On Friday, October 11, 2013, API petitioned EPA to reconsider the renewable volume obligations (RVO) set in the final 2013 RFS rule. Under the RFS, EPA is directed to set the following year's RVOs by November 30. EPA did not finalize the 2013 RVOs until August 2013, nine months after the deadline. API argues that EPA improperly used updated Energy Information Administration (EIA) production estimates and that the cellulosic RVO is too high.

It is being reported that API and the Advanced Biofuels Association (ABFA) are working together on potential legislative language to increase the value of RINs associated with advanced biofuels and to allow them to help make up conventional RINs due to blend wall constraints under the federal RFS. According to news reports, the two groups are working to present this potential language to members of the House Energy and Commerce Committee who are working on developing legislation to modify the RFS.

Several of API's largest members, including Shell and BP, are working on projects to produce advanced biofuels. Reportedly, API and ABFA contend that increasing the value of advanced biofuel RINs and allowing them to help make up conventional RINs due to blend wall constraints would help spur investment in and development of advanced biofuels to help meet the RFS. All other major biofuels trade associations are advocating against any legislative change to the RFS. They argue that, however well-intentioned, opening the RFS up to amendment would make the law vulnerable to repeal, for which the oil industry is heavily lobbying.

In addition, several biofuels groups argue that there are sufficient RFS compliance options and solutions to the blend wall, which they say has been intentionally created by the oil industry that has chosen not to take steps to address it. For instance, these groups argue the oil industry could encourage greater investment in E85 and its distribution. While API is still advocating for RFS repeal, it is reported that the group recognizes that outcome is unlikely in this Congress. Reportedly, this is the reason the group is working with ABFA on the advanced RINs amendment.

On October 9, 2013, enzyme producer Novozymes and biofuels producer Beta Renewables announced the opening of a new advanced biofuels facility located in Crescentino, Italy, that will make commercial quantities of cellulosic biofuels. More information on the announcement is available online.

On Monday, October 7, 2013, the White House announced that Heather Zichal, Deputy Assistant to President Obama for Energy and Climate Change, will be leaving her post in the coming weeks. Zichal has been advising the President on these issues for the past five years and is considered a friend to the biofuels, renewable chemicals, and biobased products industries. For instance, she has been a strong proponent of maintaining the federal RFS and encouraging investment in biofuels. This year, Zichal helped lead the effort to roll out the President's comprehensive Climate Action Plan to reduce greenhouse gas emissions. There is no word on who will replace Zichal.

Butamax™ Advanced Biofuels LLC, a joint venture between BP PLC and DuPont, announced that it has broken ground on a plant to produce isobutanol, a renewable fuel that EPA has determined can qualify for credit under the federal RFS. Butamax is working to retrofit Highwater Ethanol LLC, an existing ethanol plant located in Lamberton, Minnesota.

The announcement is significant because Butamax has been in ongoing litigation with the other U.S. isobutanol producer, Gevo. Also, isobutanol may be one potential solution to the blend wall.

All legislative and regulatory efforts on the federal RFS are at a standstill until the government re-opens. RFS legislative and regulatory efforts, however, were strong in the days before the government shutdown.

Last week, the Biotechnology Industry Organization (BIO) sent a letter to EPA Administrator Gina McCarthy urging EPA to deny the joint petition by the American Petroleum Institute and American Fuel & Petrochemical Manufacturers requesting EPA grant a partial waiver of the 2014 RVOs under the RFS. Petitioners had argued that waiving the RVOs for 2014 to 9.7 percent of the U.S. gasoline supply is necessary so their members may fulfill their volume obligations under the RFS without exceeding the 10 percent ethanol "blend wall."

In its letter, BIO argued that petitioners may not make the waiver request because the RVO requirements do not apply to them as trade associations and, in any case, the joint petition is premature since EPA has not even yet released its proposed 2014 RVOs. In addition, BIO argued that the projected harm by the petitioners due to the blend wall is the result of "ongoing dilatory tactics of the very parties seeking the waivers" and that there exist ample options for obligated parties to comply with the 2014 RVOs. The Renewable Fuels Association (RFA) sent a similar letter to EPA opposing the joint petition.

Also last week, the heads of six biofuel trade associations met with Republican staff of the House Energy and Commerce Committee about Committee Chair Fred Upton's (R-MI) efforts to reform the federal RFS law. The six associations represented were: BIO; the National Biodiesel Board; Growth Energy; RFA; the Advanced Ethanol Council; and the National Corn Growers Association. The associations were unified in their message to staff that the RFS should remain intact as-is, with no changes. The associations argue that the consistency and stability of the RFS law drives investment in biofuels, especially advanced and cellulosic biofuels, and it contains sufficient administrative flexibility to enable EPA to make appropriate adjustments to its implementation, including any necessary lowering of annual RVO requirements for obligated parties. It is reported that the biofuels groups were told not to expect any legislative proposal to be released before EPA issues its proposed rule to set the 2014 RVOs.

In addition, last week, 20 conservative leaning business groups sent a letter to Congress urging the repeal of the RFS. Also, Americans for Tax Reform, a conservative anti-tax group led by Grover Norquist, began a letter writing campaign to Congress advocating for RFS repeal.

On September 26, 2013, cellulosic biofuels company KiOR, Inc. announced that it intends to build a second cellulosic biorefinery near its existing plant in Columbus, Mississippi. This second plant, or "Columbus II," is expected to cost $225 million and the Company intends to build it in 18 months after it raises sufficient capital. This announcement is significant, especially as it comes at a time when federal RFS opponents are strong and have waged a campaign to dismantle the law in part by arguing about the lack of development in the cellulosic biofuels space. KiOR's press release on Columbus II is available online.